Fast-growing Surprise still lags in retail development

by Amy B Wang - Feb. 18, 2010 12:00 AMArizona Business Gazette

By the numbers alone, Surprise seems an unlikely place for retail development to stall.

It is one of the youngest and fastest-growing municipalities in Arizona. According to the latest community survey from the Census Bureau, the city is the 10th largest in the state, with about 109,000 people with a staggering population increase of nearly 300 percent since 2000. Even with the economic slowdown, the population is expected to steadily climb.

However, retail development in Surprise has not followed suit. Within the city's 309 square miles, there is no "destination retail," such as Glendale's Westgate City Center. There are no full-service hotels, no toy stores, no bowling alleys.

Besides Surprise Stadium, there is little to entice baseball fans to linger despite the fact that Cactus League spring-training games, one of the city's biggest tourism draws, take place there each year.

By contrast, the spring-training complex in neighboring Peoria is surrounded by vibrant restaurants, bars and shops. And the city's first regional mall, at the master-planned Prasada community on both sides of Loop 303 between Waddell and Cactus roads, could be at least five years away.

The curiously stunted retail scene in Surprise, combined with the city's proximity to cities such as Peoria, Goodyear and Glendale, has meant a loss of untold amounts of sales-tax revenue for Surprise.

"We've got what we call a leakage," Surprise Councilman Skip Hall said. A lack of toy stores in Surprise, he pointed out, means that parents and grandparents leave town to do their Christmas shopping and take their spending power with them. Without Surprise's own regional mall, residents are instead visiting Arrowhead Towne Center in Glendale or Park West Mall in Peoria.

The untapped markets go far beyond Barbie dolls and blue jeans. A 2008 report by Surprise's Economic Development Department identified the top 10 retail needs of the city. Among them were hardware, liquor, household-appliance and computer and software shops.

For each of these categories, Surprise's existing stores filled 2 percent or less of the market need. In all, the report estimated an "opportunity gap" of more than $244 million.

Surprise officials are trying to bridge this gap. The Surprise consumer wields much potential: The median household income in the city is more than $60,000, and the median home price is $271,000.